- ISBN13: 9780470528495
- Condition: New
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Product Description
A timeless, easy-to-read guide on life-long investment principles that can help any investor succeed The Elements of Investing has a single-minded goal: to teach the principles of investing in the same pared-to-bone manner that Professor William Strunk Jr. once taught composition to students at Harvard, using his classic little book, The Elements of Style. With great daring, Ellis and Malkiel imagined their own Little Red Schoolhouse course in investing for every investor around the world-and then penned this book. The Elements of Investing hacks away at all the overtrading and over thinking so predominant in the hyperactive thought patterns of the average investor. Malkiel and Ellis offer investors a s… More >>
Two long-standing powerhouse investment experts and authors, Ellis and Malkiel have teamed up to write a simple investing guide for the uninitiated. This book is best suited for those individuals who have a very limited or no investment knowledge, as well as for investors who have had no success or can’t seem to make money consistently, especially in bull markets. This short and sweet book covers the basic elements of investing in a clear-cut step-by-step approach. Many new investors will benefit from its down to earth, easy-to-follow advice. Seasoned investors will not find anything new here. The keys to successful investing according to the authors include: saving early-on and consistently, using company and governments sponsored retirement plans to build wealth, diversification using index funds, rebalancing annually, using dollar-cost averaging, and investing for the long haul by ignoring market fluctuations.
The authors strongly believe in the buy-and-hold mantra and the efficient market hypothesis. Unfortunately, using this approach with low-cost index funds is totally antiquated in today’s financial world where we have seen two stock market crashes in the last decade where investors lost $11 trillion of market value. As the late Nobel Laureate economist, Paul Samuelson, has said: “The longer you own stocks, the greater the risk of a devastating loss.” That is why buy-and-hold is doomed to failure.
Today’s investors need a pro-active investment strategy using a specific action plan with specific buy and sell rules. Since most investors will not or do not want to consider an active investing approach, then this book will certainly suit their needs and provide a decent return, although it is subject to being fully invested during future bear markets and crashes which will occur, as they have in the past.
Buy-and-holding index funds is certainly a viable strategy, but it definitely has risk, more risk than most investors realize, and is certainly not an optimal approach. As in sports, a winning team requires both offense and defense. Buy-and-hold does not offer a defensive strategy when it is needed the most – during bear markets and crashes – and that is a major shortfall that is critical for investors to understand.
Interestingly, the authors made a surprising statement as follows “charting is akin to astrology.” This view is ridiculous in today’s world in light of the hundreds of members of the Market Technician’s Association who are Certified Market Technicians, the many members of National Association of Active Investment Managers, and the many large institutions and financial firms that have technical analysts on their staff who use charts to identify exit and entry points for the market. Using charts have helped many investors and institutions avoid this latest bear market. For example, by simply using the 200-day moving average with the major market averages, among other technical indicators, stock market losses were greatly reduced by being out of the market way before the September 2008 market debacle occurred.
In summary, the authors present a rationale for using the well-known buy-and-hold approach. They don’t seem to be swayed by the volatile and crushing crashes in the past decade, and that is their right. Investors need to understand that buy-and-hold is a dangerous approach in volatile times, and that they may want to consider alternative self-directed investing approaches to protect their hard-earned money in future years.
Rating: 3 / 5
Great little book. My husband bought one for himself and one for my sister.
Rating: 5 / 5
This book gives good advice for anyone thinking about how to manage their money and does it in concise fashion that delivers upon the promise the authors lay out in the beginning — that it will only take a couple hours to read. It’s not inaccessible at all and gives advice of which nearly anyone could–and should–take advantage. And it’s helpful as it explains why it’s good advice, contrary to what else one might hear. The only thing they could have done better was take out some of the repetition to make it even more concise, but it’s clear why they did it as they did, and it works well.
Rating: 5 / 5
I have been looking for a book to share the overall basics to financial management. Being and investor for nearly 45 years, I have learned much. I have been asked by younger relatives what steps to take in investing. Since every situation is different, it is difficult to give good advice in a conversation when even the basics of financial management cannot be assumed. This book not only explains the basics in a real person’s terms in dealing with paycheck options, banks, etc. but it also lays out a basic financial strategy for the person that does not want to make this a daily, weekly, or monthly routine. It starts out with debunking that a person can invest if they do not first have savings and zero balances on revolving credit. The step by step process up to investing, then basic investments that work over time, followed by yearly maintenance (reread the book annually) makes this a timeless tool. It takes only 2 hours to read. I bought 7 books for my nephews and neices. It just may inspire financial freedom!
Rating: 5 / 5
I’m just getting started in investing and was looking for a good overview, which this definitely is. Lays out a nice clear path to what should be solid and conservative plan for investment. Quick read on concise, awesome for consumption on an iPad.
The one complaint I have is with the index in the iPad version. There’s a terms list but no links to pages. Just seems to be a quirk in this form of the media. The book itself was fantastic however.
Rating: 4 / 5